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Will Coal Make a Comeback?

In the article, Do We Have Enough Natural Gas?, published April 12, an estimate was made of how much natural gas would be required to convert 25% or 50% of coal-fired power plants to natural gas.

In the 25% scenario, coal would account for 40% of electricity generated in the United States. This compares with a high of 53%, in 1997, and is, according to the EIA, the current forecast for 2013.

Large steam turbine and generator of the type found in coal-fired power plants.

But will this be the new normal, or will coal’s role decline further? Or, will coal’s role increase?

Three factors affect the outcome.

First, is the relative price of coal versus natural gas.

When natural gas is at $3.00 per million BTU, it has a decided advantage over coal. But when natural gas is over $4.00 per million BTU, coal to gas switching slows, and then stops as the price of natural gas goes much above $4.50. As it exceeds $4.50 per million BTU, a reverse trend can evolve where coal replaces natural gas.

Currently, the price of natural gas is around $4.40 per million BTU, and may approach $5.00 per million BTU before the end of the year.

With natural gas at these prices, coal could regain some of its market and increase its share of electricity generation from 40% to around 45% in 2014.

Second, is the effect that Mercury and Air Toxics Standards (MATS) regulations will have on coal-fired power plants.

These regulations will require large investments in pollution control equipment, where current installations can’t meet the MATS regulations. MATS will begin to effect coal-fired power plants in 2015.

MATS, unless changed, will result in more coal-fired power plants being closed, which will, once again, begin to reduce coal’s share of generation.

Based on previously announced closings, plus probable closings due to MATS, coal’s share of electricity generation could easily fall to below 40%, possibly as low as 35%.

In so far as whether the United States has enough natural gas, i.e., as discussed in the April 12 article, the probability is that the effect of converting coal to natural gas should be only slightly more than estimated for the 25% scenario; possibly reducing years supply from 88 to 87 years1.

Or stated differently, the long-term effect of coal to gas conversions, due to the relative price of coal and natural gas, won’t have a major effect on the number of years supply of natural gas.

Third, is the effect that EPA rules on CO2 emissions have on coal-fired power plants.

As currently stated, the rules barely allow natural gas combined cycle plants to operate, and prevent the building of new coal-fired power plants of the most modern, efficient design.

If natural gas prices were to remain around $5.00 per million BTU, or higher, ultra-supercritical coal fired power plants2 would be competitive with natural gas.

Existing EPA rules on CO2 prevent the United States from being able to take advantage of the less costly electricity these plants could produce.

If the EPA was to extend the rules on CO2 emissions to existing coal-fired plants, it would have a devastating effect on the production of electricity. There is no known method for capturing CO2 from existing power plants, and no known method for sequestering the CO2 underground, so these plants would have to shut down if the rules were enforced.

This is why global warming became an energy issue when the EPA determined that CO2 was a pollutant under the Clean Air Act.

It’s also why these articles include information on the science behind the issue, such as the report by former Apollo astronauts and scientists3.

It should be noted that natural gas power plants also emit CO2, so, if CO2 is as important as the EPA claims, natural gas power plants will also have to be shut down.

The largest variable affecting how much coal will be replaced by natural gas is the EPA’s regulations on CO2 emissions.

Note:

This is for coal to gas switching alone, and doesn’t include the other alternative uses for natural gas as discussed in the April 12 article.

China and Europe are building ultra-supercritical coal-fired power plants.

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